Gray Media's Q1 2025: Contradictions in Broadcast Opportunities, Cost Management, and Strategic Growth

ESPN-Major League Baseball opportunity for broadcast, cost-cutting initiatives and expense reduction, Assembly Atlanta's financial contribution, duopoly opportunities and regulatory environment are the key contradictions discussed in Gray Media's latest 2025Q1 earnings call.



Revenue and Expense Performance:
- Gray Media reported total revenue of $782 million for Q1 2025, a 5% decrease from Q1 2024 and 1% above the high end of guidance.
- Despite a 19% decrease in adjusted EBITDA compared to the previous year, total operating expenses were 1% below the low end of guidance.
- The revenue decline was attributed to lower political advertising and the absence of the strong Super Bowl results experienced in the previous year. Expense management was due to cost containment initiatives and strategic decisions.

Balance Sheet Strengthening:
- Gray Media reduced its outstanding indebtedness by $17 million in Q1, achieving a lower leverage ratio compared to the beginning of the year.
- The company received an extension and increase in its accounts receivable securitization facility to $400 million and increased its revolver availability to $700 million.
- These actions were part of the company's ongoing commitment to deleverage and enhance liquidity, aided by strong support from banking partners.

Political Advertising Surge:
- Political advertising revenue for Q1 2025 was $13 million, surpassing the guided range of $2 million to $4 million.
- The increase was primarily driven by competitive races in Wisconsin, Florida, and other elections, with some spending for races up to 18 months away.
- This unexpected increase was attributed to significant spending in key races and early ad buys for future elections.

Assembly Studios and Content Production:
- Assembly Studios reported strong ratings for its new CBS soap opera, Beyond the Gates, and is actively hosting various productions.
- The studio reached an occupancy rate of about 75% to 80%, with more productions anticipated in the coming months.
- Growth in production activities is due to strategic partnerships and expanded studio facilities, contributing to the company's diverse content offerings.